KentuckyOne Health terminating contracts with doctors

KentuckyOne Health is severing employment contracts with about 25 doctors, some as soon as this July.

After going on a buying spree for physician practices more than five years ago, the ailing Louisville-based health system is shedding selected doctors in a cost-cutting move that doctors say will send ripples across Louisville's medical community and the patients they serve.

KentuckyOne said the cuts were due to "challenges," from the evolution of health care reform and a decline in patient volumes in some areas, and insisted patients would see only a "minimal disruption."   

Officials told the Courier-Journal the changes are unrelated to discussions between the system's parent, Denver-based Catholic Health Initiatives, and Dignity Health, another national health system based in San Francisco.

Some doctors learned in a meeting with top administrators about two weeks ago that KentuckyOne would exercise an option to terminate their professional services contracts.

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"It was a surprise," said Dr. Richard Holt, a spine surgeon who was at the meeting. "They had an escape clause, and they used it."

His agreement expires July 31. 

KentuckyOne is made up of the former Jewish Hospital & St. Mary's HealthCare and St. Joseph Health System, has 15 hospitals and more than 200 locations. CHI reported in February that it had narrowed operating losses to nearly $76 million during the last quarter of 2016 as it continues affiliation talks with Dignity Health, but it said operations in Kentucky and two other states had suffered year-over-year losses.   

KentuckyOne confirmed last month it would lay off 250 mostly corporate administrative staff members. Those layoffs are related to a mutual decision calling for KentuckyOne to cede management of University of Louisville Hospital and the James Graham Brown Cancer Center to U of L on July 1.

KentuckyOne officials declined to confirm which doctors and practices were being let go. The statement said: "The impacted physicians have all been notified and will continue with KentuckyOne through the term of their contract. Individual physicians are making decisions on how they will continue practicing, caring for current and future patients and what level of staff support is needed. As a result, we anticipate minimal disruption in patient care as a result of this decision." 

 It added that affected patients, in most cases, could stay with their current physician or could transfer to a nearby KentuckyOne Medical Group physician. 

But Dr. James Patrick Murphy, past president of the Greater Louisville Medical Society, said it may not be that simple.

Patients, particularly those looking for a new primary care doctor, are seeing the impact of shortages of doctors around the country. If a person can find a doctor who accepts his or her insurance, Murphy said, the patient may not be able to get an appointment for months because the practice is heavily booked.

In the case of KentuckyOne-employed doctors, some are apparently considering retirement. 

Holt, whose practice is affiliated with Jewish Hospital, said he is leaning toward hanging up the scalpel. At 69, he said, he isn't interested in starting a stand-alone practice again.

And when he contacted Norton and Baptist Health, he said he was told neither is taking on new doctors now. Baptist Health didn't respond to requests for comment late Tuesday afternoon.

Norton's chief medical officer, Dr. Steven Hester, said in an email that Norton is open to considering "opportunities" that help the health system meets the needs of the community.

Holt said he gladly sold his practice five years ago to KentuckyOne to be relieved of making payroll and handling other administrative duties. That's been a going trend in health care for two decades because the skyrocketing costs of running individual practices.

Even though Holt's practice with another surgeon and a staff of 12 people has excellent productivity numbers, he said, he understands the move is about saving money. It's no secret that CHI has suffered "big-time losses" and that KentuckyOne, in turn, must cut overhead, Holt said.

Dr. John Roberts, a neonatologist and president of the Greater Louisville Medical Society, said the reduction in doctors is yet another sign that the health care industry "is in a mess." 

Hospitals and health systems are weighed down by rising costs, flat or falling reimbursement levels on services, and more uncertainties ahead for health care reform, Roberts said. "Like any business, if there's no margin, the mission means nothing. ... All of the hospitals are having to reassess what they need to be supporting."

Reporter Grace Schneider can be reached at 502-582-4082 or gschneider@courier-journal.com.